the roi of pr final

8/8/2019 The ROI of PR Final

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PR: The Cost-Effective Choice

B-M Knowledge


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This presentation includes research and case studies which support the cost-effectiveness of using PR to generate sales and to drive change in attitude, awareness,etc. This document can help inform discussions with clients about the ROI of PR,including:

PR is considered to have a higher ROI than other forms of marketing, includingadvertising.

PR is particularly cost-effective during difficult economic times because of its relativeaffordability in terms of value/dollar.

PR is becoming even more cost-effective in the digital age as digital PR (blogs, social

networking, viral word-of-mouth, etc.) continues to evolve.

According to Mark Weiner, CEO of PRIME Research and author of Unleashing thePower of PR, Fortune Most Admired Companies have PR budgets 2.5 times largerthan comparable companies of the same size! As part of a well integrated marketingprogram, PR is an extremely cost-effective communications tool.

PR: The Cost-Effective Choice


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What it was:Through Veronis Suhler Stevenson research and data published by TNS Media,Burson-Marsteller assessed marketers relative spend on advertising and PR.

What it proved about PR spend:Including all types of advertising (but excluding consumer promotions), spend on

advertising outpaces spend on PR by a 1:56 ratio.

Source: Burson-Marsteller analysis on 2004 Veronis Suhler Stevenson & TNS Media data

Public Relations vs. Advertising Spend (Version 1)

Internet + Magazine + Newspaper + Direct + TV

$2 + $5 + $14 + $15 + $20

Mail

Advertising & Direct Marketing = $56

PR

$1

:


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What it was:Through Veronis Suhler Stevensonresearch and data published by TNSMedia, Burson-Marsteller assessedmarketers relative spend on advertisingand PR.

What it proved about PR spend:Including all types of advertising (butexcluding consumer promotions), spend

on advertising outpaces spend onPR

by a 1:56 ratio.

Source: Burson-Marsteller analysis on 2004 Veronis Suhler Stevenson &TNS Media data

Public Relations vs. Advertising Spend (Version 2)

TV advertising: $67.8 billion

Magazine advertising:$16.3 billion

Direct Marketing: $52.2 billion

Newspaper: $46.6 billion

Internet Advertising:$6.8 billion

PR:$3.4b


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What it was:In 2005, P&G developed PREvaluate, with partner Delahaye (now Cision)which combines an econometric marketing mix model with detailed data onmedia impressions. P&G used the tool to evaluate the impact (ROI) of each

individual component of the marketing mix (including PR) on revenue for sixof its brands.

What it proved about PR effectiveness:For 4 of the 6 brands that P&G analyzed with PREvaluate, PR had ahigher return on investment than any other marketing medium. For theother 2 brands, PR had the second-highest ROI.

Source: Advertising Age, November 2005

P&G PREvaluate


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What it was:Miller Brewing Company incorporated data from Delahayes (now Cision) Impact Scoreand Net Effect tools into its marketing mix model to analyze media coverage of severalbrands of Miller beer as well as comparable brands of competitors over time. Thisanalysis assessed penetration of public relations program effectiveness.

What it proved about PR effectiveness:The analysis helped explain previously unexplained sales as being attributable to publicrelations.

Based on a 2007 analysis, researchers discovered that for every one dollar spend oneach marketing type, PR generated $8 in sales, compared with trade advertisingwhich brought in only $2.20 for every dollar spent and TV advertising which earnedonly $1.06 per dollar.

Based on a 2003 analysis, Miller learned that its PR campaigns generated roughly 1.2%of base product sales and 4% of incremental sales, and TV advertising generated 5.3%of base sales and 17.3% of incremental sales. While Miller did not reveal its advertising-PR spending ratio, the average U.S. industry average is 61:1 in favor of ad spending,indicating a much more efficient impact from the PR spend.

Miller Brewing: Marketing Mix Model + Media Analysis

Source: Hudson Valley Business Journal, May 2007 and Council of PR Firms 2005


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What it was:In 2001, Delahaye (now Cision) and the Hudson River Group worked togetherto incorporate news content analysis data into an unnamed clients marketingmix model.

What it proved about PR effectiveness:The total marketing return was $2.35 per dollar spent, for a 35% payback.

However, the PR return was $19.53 per dollar spent, for a 293% payback.

Delahaye & Hudson River Group: Marketing Mix Model + Media Analysis

Source: Delahaye (Cision) Webinar


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What it was:AT&T built a model to assess how various marketing elements influenced newcustomer acquisition. The model, which originally included outboundtelemarketing, advertising and direct mail, was adapted to include newscoverage. News coverage was broken down by topic and these data streamswere input into the model.

What it proved about PR effectiveness:The strongest correlation noted in the news coverage analysis was betweenacquisitions and positive news coverage related to price/value of the AT&Tservice. AT&T then examined the relative power of each of the marketing

elements on acquisitions. The analysis showed for the first time that newscoverage plays a role in acquisitions. In this case, positive news coveragerelated to price/value of AT&Ts service appears to have the same levelof impact as advertising, with about 8 percent of acquisitionsattributable to each of those marketing elements.

AT&T Research: News Coverage Impact on AT&T Acquisition

Source: Council of PR Firms 2005, although the research is f rom the late 90s.


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What it was:Every 2 years, Watson Wyatt surveys professionals to rate their organizations communications effectivenessand conducts a regression analysis against the organizations financial performance.

What it proved about PR effectiveness:The results show that high levels of communications effectiveness lead to greater shareholder value.

Companies with high communication effectiveness provided a 91% return to shareholders comparedwith a 62% return by companies with less effective communications during the 2002-2006 period.

High communications effectiveness is a leading indicator of financial performance , as the correlationbetween communication effectiveness and subsequent financial performance (one year ahead) was twiceas large as the correlation between financial performance and subsequent communication effectiveness.

Increasing a companys communication effectiveness by 1 standard deviation in the research correlates to a15.7% increase in market premium.

Companies with highly effective communications programs had a Q Score* that was 21% higher than thecompanies with less effective communications programs. (1.37 for high effectiveness companies vs. 1.13for low effectiveness companies).

Companies with high levels of communication effectiveness are 20 percent more likely to reportlower turnover rates than their competitors.

WatsonWyatt Research: Communications Drives Shareholder Value

* A Q Score refers to Tobins Q, a f inancial measure which represents the ratio of the market value of the companys equity plusbook value of debt divided by the book value of the assets.

Source: Watson Wyatt Reports, 2007/8 and 2005/6


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WatsonWyatt Research: Communications Drives Shareholder Value, (continued)

Source: Watson Wyatt Reports, 2007/8

What it proved about PR effectiveness, continued:The chart below shows the hierarchy of communications components as they contribute to a companys marketvalue. Improving each component of the hierarchy increases the companys market value by the percentindicated. For example, improving each component of effective communication will improve a the companysmarket value by 15.7%.


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What it was:Southwest Airlines worked with SEO-PR to determine if they could reach consumeraudiences directly through press releases via news search engines. They usedYahoo! , AOL and Google news to identify the most popular search terms related toSouthwest Airlines and optimized 3 press releases with those terms. They included a

unique trackable url in each press release to measure sales generated by the pressrelease.

What it proved about PR effectiveness:The first optimized press release about a Philadelphia launch Directly resulted in$80,000 in ticket sales, plus stories in more than a dozen media outlets, includingThe New York Times, Washington Post, Dallas Morning News, and Philadelphia

Business Journal.

February 2004 to April 2005, Southwest Airlines was able to directly track more than$2.5 million in online ticket sales to optimized press releases.

Case: Southwest Airline Linking SEO* to Sales

*SEO is Search Engine OptimizationSource: Institute for Public Relations, 2005


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Case: Sears Placement on Oprah

What it was:Sears donated gifts to 100 children in a small Texas community; Oprahdiscussed it on her show and proclaimed We love Sears during thesegment.

What it proved about PR effectiveness:Using pre- and post show surveys tied to its ongoing brand research, Searsfound the show provided incentive to move viewers from neutral to positiveintent to shop at Sears during the holidays, with about an 11% increase inpositive intent. The amount consumers said they would spend at Searsduring the holidays increased at an estimated 39% per shopper. And

finally, correlating the other research to sales data, Sears concluded the shiftin attitudes led to spending increases estimated at $13 million.

Source: Council of Public Relations Firms, 2005


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Research: Advertising vs. Editorial

What it was:In 2004, two professors at the University of Miami conducted an experiment where respondentswere shown mocked up newspapers with either an advertisement or an editorial piece on a

hypothetical brand, Zip Chip.

What it proved about PR effectiveness:

There were no significant differences in brand awareness or purchase intent forrespondents who were shown ads vs. editorial content. The conclusion is that because gettingeditorial is less expensive than placing an ad, the editorial (PR) is the more effectivecommunications tool.

Zip Chip Brand Awareness Zip Chip Purchase Intent

Source: Report from University of Miami Professors, David Michaelson and Don Winslow Stacks


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Contact

Ashley Welde

Director of Knowledge & Measurement

B-M Knowledge Development

212.614.4924

[email protected]

the roi of pr final

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